Insolvency and Restructuring

Author: İdil Yıldırım

Introduction

The Constitutional Court, in its decision dated 14.09.2021 on application no. 2018/25663 (“Decision"), found that applicant Cahide Demir’s right to property was violated on the ground that the mortgage on her real estate, established to secure a third party’s debt, had not been released by the relevant bank despite the fact that the debt had been discharged. The bank claimed that the same third party was indebted to the bank from other transactions. The Decision was published in the Official Gazette dated 20.12.2021 and numbered 31695. The Decision rendered by the Constitutional Court is notable in terms of assessing the scope of the mortgages established by the banks for the loans they provide.

Factual Background

The facts of the case are as follows: The applicant's son-in-law, E.K. had taken a housing loan from a bank (“Bank”) on 12.08.2008 and a mortgage was established on the applicant’s real estate to secure the housing loan in favor of the Bank. The first page of the mortgage deed includes this statement: “Considering the immovable in question is registered in the name of Cahide DEMİR, the proprietor has applied in person and requested that the whole property be mortgaged as a guarantee of any and all debts arising from any loans that E.K has taken or will take from .... Bank A.Ş in the amount of TRY 120,000.00 and at the 1st degree and 1st ranking at the interest rate of 68% until release of which is notified by the bank.”

Read the entire article.